Income or loss can be allocated to partners based solely on average capital balances.
Neither the amount of detail nor the format of a management accounting report is
affected by those to whom the report is sent.
Standard costing can be used only with a process costing system.
The purchases journal is used to record only purchases made on credit.
Investors and creditors use financial statements to evaluate a company’s ability to pay
dividends and interest.
It is possible to invest no tangible assets into a partnership, yet be given a positive
opening capital balance.
The net present value method and other methods of capital investment analysis should
only be used for taking short-term decisions.
The number of equivalent units for direct materials cost using the FIFO costing
procedure is the units in beginning work in process inventory minus units started during
the period plus units completed during the period.
Understanding cost behavior helps managers in planning the optimal mix of services or
products to offer.
When the effective interest method of amortization is used, the amount of bond interest
expense for a given period is calculated by multiplying the face interest rate by the
bond’s carrying value at the beginning of the given period.
The par value of a bond is equal to its face value.
To calculate payables turnover, an increase in merchandise inventory must be added to
cost of goods sold before dividing by average accounts payable.
Management accounting reports
A.are primarily used by parties inside the organization.
B.must be prepared on a periodic basis.
C.are generally publicly available.
D.are based on generally accepted accounting principles.
Use this balance sheet and income statement to answer the following question. Use
ending balances whenever average balances are required for computing ratios.
The debt to equity ratio for National Textile is
A.67 percent.
B.75 percent.
C.25 percent.
D.33-1/3 percent.
A remittance advice is attached to a(n)
A.receiving report.
B.check.
C.purchase order.
D.invoice.
Prepare year-end adjusting entries for each of the following situations.
a. The Office Supplies account showed a beginning debit balance of $800 and
purchases of $1,000. The ending debit balance was $400.
b. Depreciation on buildings is estimated to be $7,600.
c. A one-year insurance policy was purchased for $6,000. Five months have passed
since the purchase.
d. Accrued interest on notes payable amounted to $1,500.
e. The company received a $14,400 advance payment during the year on services to be
performed. By the end of the year, one-third of the services had been performed.
f. Payroll for the five-day workweek, to be paid on Friday, is $14,000. The last day of
the period is a Tuesday.
g. Services totaling $780 had been performed but not yet billed or recorded.
On July 1, 20×5, Augusta Enterprises issued bonds with a face value of $1,000,000. The
bonds carry a face interest rate of 10 percent that is payable each July 1 and January 1.
a. Prepare the entry in journal form without explanation for the issuance assuming the
bonds are issued at 97.
b. Prepare the entry in journal form without explanation for the issuance assuming the
bonds are issued at 102.
The entry to close the Withdrawals account is
A.debit owner’s Capital and credit Withdrawals.
B.debit Withdrawals and credit owner’s Capital.
C.debit Income Summary and credit Withdrawals.
D.debit Withdrawals and credit Income Summary.
Horshack Mining Company purchases a gravel pit for $5,000,000. It estimates that
10,000,000 tons of gravel can be extracted over the pit’s useful life. If 2,000,000 tons
are extracted during the first year but only 1,440,000 tons are sold, what amount should
be recorded for Gravel Inventory and Depletion Expense, respectively?
A.$280,000 and 720,000
B.$720,000 and $280,000
C.$720,000 and 720,000
D.$280,000 and $1,000,000
In trend analysis, each item is expressed as a percentage of the
A.net income amount.
B.total assets amount.
C.base year amount.
D.retained earnings amount.
An amount for owner’s Capital would not appear in which of the following work sheet
columns?
A.Income Statement
B.Balance Sheet
C.Trial Balance
D.Adjusted Trial Balance
All of the following items would appear on the balance sheet except
A.withdrawals.
B.the owner’s capital account.
C.Accounts Receivable.
D.Patents.
Which of the following accounts includes the cost of completed but unsold units of a
manufacturing firm?
A.Cost of Goods Sold
B.Finished Goods Inventory
C.Work in Process Inventory
D.Materials Inventory
Qualitative factors that are considered by decision makers include all of the following
except
A.impact on other company operations.
B.net income.
C.anticipated future technological improvements.
D.competition.
The following amounts are taken from the balance sheets of Baltic Company:
During 20×5, expenses related to accrued liabilities were $15,250, and expenses related
to prepaid expenses were $10,500.
a. Compute cash payments related to accrued liabilities.
b. Compute cash payments related to prepaid expenses.
Improperly classifying large expenditures as assets rather than expenses
A.could constitute fraud.
B.understates income for the period.
C.understates equity on the balance sheet.
D.results in none of these options.
When a business reports an asset at an inflated dollar amount, is has violated the
measurement issue of
A.recognition.
B.valuation.
C.classification.
D.realization.
Hilda wishes to deposit an amount into her savings account that will enable her to
withdraw $1,600 per year for the next four years. She should deposit an amount equal
to $1,600 multiplied by the
A.present value of a single sum factor.
B.present value of an ordinary annuity factor.
C.future value of a single sum factor.
D.future value of an ordinary annuity factor.
A company’s acceptance of credit cards like Visa is an example of
A.securitization.
B.factoring with recourse.
C.discounting.
D.factoring without recourse.
Under the allowance method, when a specific account is written off,
A.total assets will be unchanged.
B.total assets will decrease.
C.net income will decrease.
D.total assets will increase.
The statement of cash flows would disclose the purchase of a building for cash
A.nowhere on the statement.
B.in the operating activities section.
C.in the investing activities section.
D.in the financing activities section.
On December 31, 20×5, the balance sheet of Dennis, Inc. reported bonds outstanding
with a face value of $500,000 and a related unamortized premium of $25,000. Interest
is payable semiannually on January 1 and July 1.
a. Prepare an entry in journal form without explanations to record the retirement of
bonds with a face value of $300,000 on January 1, 20×6, assuming the bonds were
redeemed at a call price of 103.
b. Prepare an entry in journal form without explanation on January 1, 20×6, to record
the conversion of bonds with a face value of $200,000 into common stock. Each $1,000
bond is convertible into 25 shares of $10 par value common stock.
One reason that a common-size statement is a useful tool in financial performance
evaluation is that it enables the user to
A.make better comparisons of two companies of different sizes in the same industry.
B.determine which companies in a single industry are of the same size.
C.judge the relative potential of two companies of similar size in different industries.
D.determine which companies in a single industry are of the same value.
Use this information to answer the following question.
The following totals for the month of September were taken from the payroll register of
Meadors Company:
The entry to record the accrual of employer’s payroll taxes would include a debit to
Payroll Taxes and Benefits Expense for
A.$2,496.
B.$1,100.
C.$1,596.
D.$496.
The minimum rate of return on an investment is also known as a
A.hurdle rate.
B.payback rate.
C.net present value.
D.profit margin.
Green Skies Company prepares its statement of cash flows using the indirect method.
Indicate whether each of the items below would be added to (+) or deducted from (‘“)
net income to determine net cash flows from operating activities.
_____ 1> Increase in Inventory
_____ 2> Increase in Accounts Payable
_____ 3> Depreciation Expense
_____ 4> Loss on Disposal of Truck
_____ 5> Decrease in Accounts Receivable
_____ 6> Decrease in Wages Payable
_____ 7> Amortization Expense
_____ 8> Decrease in Prepaid Rent
_____ 9> Gain on Sale of Land
_____ 10> Decrease in Income Taxes Payable
The information that follows pertains to stockholders’ equity data of the Beagle
Corporation on December 31, 20×5. Compute the amount of each item indicated by a
letter in the listing below. Where necessary, carry answers to two decimal place.
Prepare entries in journal form without explanations for the merchandising transactions
listed below for Kona Company. Assume use of the periodic inventory system.
Why does the acquisition of land in exchange for common stock qualify as a noncash
investing and financing transaction?
Pretty Pillows, Mfg., manufactures silk throw pillows. Last month the company
produced 3,890 pillows. Using job order costing, determine the product unit cost for
one pillow based on the following costs: production facility utilities, $1,600;
depreciation on production equipment, $650; indirect materials, $400; direct materials,
$5,300; indirect labor, $1,000; direct labor, $3,500; sales commissions, $4,000;
president’s salary, $8,000; insurance on production facility, $1,000; advertising expense,
$900; rent on production facility, $6,000; rent on sales office, $4,000; and legal
expense, $600. Round your answer to two decimal places.
